ADDRESS TO THE CLEAN ENERGY COUNCIL – CLEAN ENERGY SUMMIT

Thank you one and all. Obviously some would say it seems innocuous that I would be here, as the caricature of me is a redneck, which is probably right, that I'd be a supporter of renewable energy. But of course I am. I was going to call it ‘Green’ energy, but I've just been watching how they're going today and they've just lost their second deputy. So I don't know about green energy, but ‘Green’ power is really suffering today with Senator Scott Ludlum retiring and now it looks like Senator Larissa Waters is following him out the door.

 What I can say about renewable energy is the great effect it is having in my electorate. You see at Glen Innes in excess of a billion dollars going to be invested in renewable energy. I think it needs to be stated at the start how we can walk and chew gum with this one. We have to make sure that we comply with our international agreements, but we have to make sure that we have the capacity to provide reliable and affordable power to our constituents. We will comply with our international agreements and we are on track to doing that at the moment. And companies such as Goldwind will be fundamental in providing that. We'll also be working hand in glove as we move forward to more efficient photovoltaic and more efficient wind. As we work out how a grid can deal with the requirements of isolated power and also the mechanism to keep 50 hertz there so we don't have black event. We're not going to be religious about it. We believe that all electrons are created equal and that what we have to do is to make sure that we can deliver both renewable and our baseload power requirements. The worst thing we can do for renewables is to get this wrong. How would it be wrong? Well if it was somewhat to follow the path that happened in South Australia we'd have a huge problem. If today, or in summer more likely, the power in this city was to go out, that would be devastating. That would be an incredibly bad policy move, because the dynamics of the politics from that point forward would change immediately and it would become clouded by an overwhelming requirement that that event could never happen again. So what we have do to in complying with the Paris Agreement and complying with our international agreements is to make sure that we move forward in a way that keeps the lights on, and the air conditioners on, and the computers running, and the lifts moving in the biggest city in Australia which is Sydney, where we are at today.

 

The government has at the forefront some of the most major investments. Snowy Hydro 2.0 is going to be an incredible mechanism that will work hand in glove with renewables. So as the renewables are working, as the sun is shining and the wind is blowing, we have the capacity to store that energy in a way that we can convert into baseload power as required. We have worked with ARENA and in Glenn Innes the other day, there was ARENA working towards the construction of the solar farm, working hand in glove with private enterprise. But our focus, and my focus is tempered and sober, because we must focus on Mr and Mrs Smith at 123 Jones Street, in the backstreet of a regional town. You have to ask the question that is fundamental to what is their standard of living, that reliable and affordable power be maintained. That part of the equation must be resolved. If we can't do that, then what we are saying is that for a certain group of people, they will have power and for another group, they won't be able to afford it. So we will work closely with your industry in making sure that we resolve that part of this fundamental social requirement and fundamental social good.

 

Renewable energy is also to be commended on how it works with landholders. The land access agreements that renewable energy has managed to carve out is admirable. They've done a better job of that than gas. Some of our gas requirements would be now flowing into the city. The renewable energy sector has shown how they can make farmers a business partner in their desire to put renewable energy on the grid. We have to be able to make sure that all these sanctions, all these parts of this puzzle are put together. We have to make sure that we can get photovoltaic and be at the forefront of the technology there. We know very soon, they're developing right now in Germany, the capacity to split the photon to get double to capacity, or immensely increase the capacity of photovoltaic cells. If this technology becomes clearly and easily available then we will see photovoltaic basically being comparable and well and truly commercially applicable without any real subsidies at all. We've got to acknowledge that the government policy that is bringing forward renewables is a policy. If that policy was lost, if it was put aside, it would create huge uncertainty in the renewable market. We've got to make sure we stay consistent in that. And because we need consistency, we need our colleagues in the Labor Party to come to a bipartisan position so that we can land this. So that we can create a mechanism that in the future, we see the further construction of wind and solar and pumped hydro, but also of efficient coal fired power. If we just say that one is good and the other is bad, then we have evolved into a religious perspective of that some electrons are apparently more righteous than others. And if we can do both efficiently and properly, then we're doing the job that will inherently support both.

 

As stated, the biggest threat to renewables is a black event in Sydney. That would be one item that no matter which political party you're in, you would not be able to survive. So that has to remain an absolute focus on what we do. We're seeing other areas and other forms of technology coming forward. Obviously we've heard a lot about that the battery capacity in South Australia, but that battery capacity, for our requirements - it's relevant, but it's very small. Our backup base load capacity has to be immense. And that's why we welcome what they do in South Australia but we understand that really, to get this in a bulk form, you're going to be looking at things such as Snowy Hydro.

 

We know that we have the Finkel Report coming forward, and this will be a large debate within Canberra. But what is important is that we get to some form of resolution, that we get some form of conclusion. All parties will have to move. The National Party, the Liberal Party in sections, the Labor Party, the Greens if any of them are left. We have to make sure that what we do is we get to a position where we can show you the investor and you in the renewable energy sector and those in the coal industry and those in the gas industry, that they have a sure future through the investment cycle. As an accountant, you must take to the board something that shows the capacity of the return over a longer period of time. And that means we have to nail this down so that what we have is the confidence in the marketplace that whether it's photovoltaic, whether it's wind, or whether it's low emissions, high efficiency coal, whether it's gas, whether it's hydro, that people can see a return on their capital. That, I believe, is the ultimate truth.

 

It must also be noted that so often, in the power discussion and the power issue, people think it's the wholesale price of power, that's the only thing that matters. And of course, it's not. The Australian people have to be made aware over and over again that a large section of their power bill is poles and wires, the return on poles and wires. And this is something that requires the States within the Commonwealth to have a discussion about what is a reasonable return on investment. Because in many instances the polls and wire is excessive. You're asking for a 14 percent return, and can borrow money at 2.5 percent, it's a pretty easy game to play. It's quite simple, just keep borrowing money the money and you're going to get multiple returns from any money you borrow. But of course, who pays for that? Well, it's the consumer. The consumer pays.

 

And that section of the equation is sometimes swept under the carpet as state governments swept the consumer, the mum and dad, Mr and Mrs Smith at 123 Jones Street, of their money to get a return back to state coffers. So the Federal Government will play its part. And the state governments, I think there's a clarion call that there has to be a discussion about what is a reasonable return on poles and wires and what is obviously an excessive return. An excessive return in more than just a monopolistic market. In many it’s a monotonistic marker. And that's something that is so closely associated with you, because if they ask for a an unreasonable return and somebody is looking for a witch to burn, unfortunately you might see them up and say this is purely renewables fault, when it's not. It's the excessive return that's demanded by other sections within this power equation. So whether it's Goldwind or whether it's other large producers of renewable energy, what we have in front is a diligent government trying to come forward with a competent plan that states at its forefront that the person who lives not so much in the better suburbs, but in the lesser suburbs and the regional towns has the capacity to afford their power.

 

We know that because we are a good nation, we will comply with our international agreements and we are doing that. We are doing that. And in the New England, we will become a power exporter. Predominantly from renewables. And that is something that if someone had stated that to us ten years ago, you would say it's impossible. But that is the case. That is the case. As we find in our nations, new areas of resources, solar resources, the fact that New England at high altitude has a more efficient photovoltaic capacity from the cells they have. The fact that the wind resource and its matching with excess capacity of capacity on transmission lines means that we have new areas where we can bring new power onto the grid.

 And as long as we keep driving forward with the technology so it becomes better and more improved and more efficient, then we have a good outcome over the longer term. We will also make sure that as one of the largest exporters of coal, we will have to stay at the forefront of that agenda as well. We have a moral responsibility to provide to the world the technology that provides the greatest unit of outcome for one unit of coal or one unit of gas.

 These are large export markets for us. And to step away from them and say we just don't believe in that form of power anymore is oxymoronic to the purpose of earning money at the same time. In the future, with baseload, maybe Australia will have a discussion on other forms of power such as nuclear energy. If you really want zero emissions, then it has the capacity to do it. Of course, the inhibiting factor there I believe these days is not so much peoples aversion to it, but the cost of it and how that works in the returns you get. But I wish you all the very best for your summit. We have a rather full day, we have Cabinet here today and then I have got to get back to Canberra for further meetings. So this really is a flying visit. And I wish that as we make that commitment that we're willing to work with all parties to try to make sure that we get a secure and solid outcome. But that means that everybody has to meet on a reasonable premise. I thank you very much, all the best and God bless.

 

 

ENDS